Govt confirms landmark court ruling will apply to all public sector schemes

The government has confirmed that the Court of Appeal ruling that changes it made to judges and firefighter’s pensions were discriminatory on the grounds of age, applies to all public sector pension schemes.

In a written response to the ruling, following the decision by the Supreme Court to deny the government an appeal, Chief Secretary to the Treasury, Elizabeth Truss said: “The court has found that those too far away from retirement age to qualify for ‘transitional protection’ have been unfairly discriminated against.

“As ‘transitional protection’ was offered to members of all the main public service pension schemes, the government believes that the difference in treatment will need to be remedied across all those schemes. This includes schemes for the NHS, civil service, local government, teachers, police, armed forces, judiciary and fire and rescue workers,” she noted.

Truss said initial estimates suggest that it will cost the government around £4bn.

In response to the government’s statement, TUC deputy general secretary, Paul Nowak, said: “It’s vital that public sector workers have confidence in the future of their pensions.
“The government’s commitment to engage with trade unions on the implications of the McCloud judgment is welcome. This engagement needs to be informed by serious scheme level discussions involving the relevant unions.”

Firefighters and a group of 230 judges won their legal case against the government that changes made to their pension schemes were discriminatory back in December 2018, with the government being denied the right to appeal. The two cases were ruled on together due to overlapping similarities, and earlier conflicting outcomes at Employment Tribunals.

The Fire Brigades Union, which undertook legal action on behalf of firefighters, described it as a “landmark ruling”. Changes were made to the firefighters’ pension scheme in 2015, and the FBU argued that the protection imposed on younger members was unlawful on age discrimination grounds.

The 2015 changes meant that older members could stay in the existing and better pension scheme, and younger members had to transfer to a new and worse scheme, causing huge financial losses. The FBU initiated over 6,000 Employment Tribunal claims alleging that the changes amounted to unlawful age discrimination.

The challenge from the 230 judges, represented by law firm Leigh Day, involved similar circumstances when they challenges the government’s decision to force younger judges to leave the Judicial Pension Scheme.

The judges argued that this was discriminatory on the ground of age. Because of recent drives to increase diversity in the Judiciary, many more of those in the younger group of judges are female and/or from a BAME background, and so claims were also pursued for indirect race discrimination and a breach of the principle of equal pay.

A previous Employment Tribunal on the firefighters' case in February 2017 ruled that the changes were not discriminatory. However, an Employment Tribunal on judges pensions ruled that the changes were discriminatory. As a result, the two cases were combined.

The government appealed the judges' ruling but it was dismissed by the Employment Appeal Tribunal in January 2018. The government then appealed to the Court of Appeal, which today, 20 December, rejected the government’s argument.

In her statement, Truss defended the changes made to the schemes in 2015 stating that they were done so on the recommendations of the Hutton report, to ensure that pensions are “sustainable in the future”.

“The matter will be remitted to the Employment Tribunal in respect of the litigants in the firefighters and judicial pension schemes. It will be for the Tribunal to determine a remedy. Alongside this process, government will be engaging with employer and member representatives, as well as the devolved administrations, to help inform our proposals to the Tribunal and in respect of the other public service pension schemes.

“The reasons for the 2015 reforms remain: that public service pensions are a significant cost for the taxpayer, now and in the future. The judgment does not alter the government’s commitment to ensuring that the cost of public service pensions are affordable for taxpayers and sustainable for the long term.”

Commenting, Quilter head of retirement policy, Jon Greer, said: “As the two remaining Tory party candidates battle it out for the final week they are pledging anything that will win over party members, including to fix the NHS pensions allowance crisis if they are brought to power. This is, however, a pension issue that may pale into insignificance compared to the £4bn a year public sector funding gap they need to plug thanks to a monumental mistake presided over by the coalition government."

    Share Story:

Recent Stories

A time for fixed income
Francesca Fabrizi discusses fixed income trends and opportunities with Goldman Sachs Asset Management Head of UK Pensions Solutions, Fixed Income Portfolio Management, Henry Hughes, in our Pensions Age video interview

Purposeful run-on
Laura Blows discusses purposeful run-on for DB schemes with Isio director, actuarial and consulting, Matt Brown, in Pensions Age’s latest video interview
Find out more about Purposeful Run On

Keeping on track
In the latest Pensions Age podcast, Sophie Smith talks to Pensions Dashboards Programme (PDP) principal, Chris Curry, about the latest pensions dashboards developments, and the work still needed to stay on track
Building investments in a DC world
In the latest Pensions Age podcast, Sophie Smith talks to USS Investment Management’s head of investment product management, Naomi Clark, about the USS’ DC investments and its journey into private markets